Presentation Template

1
Competition Commission comments to Parliament on
the Co-operative Banks Bill 28 August 2007
2

• Outline
• Competition in the banking industry
• Determinations/appointment of supervisors
• Consequent amendments to the National Payment
  System Act
• Limitations on primary co-operative banks
• Amalgamations and merger control

3

• Competition in the banking industry
• SA banking services largely dominated by the big
  four banks
• Serious need for accessible and affordable
  banking services in South Africa
• Co-operative Banks Bill generally laudable
• Entry of alternative banking services providers
• Possible betterment of consumer welfare
• Challenge lowering the entry operational
  barriers

4

• Appointment of supervisors
• Supervisor administers registration applications
  of co-operative banks
• Advantage allows for effective administration of
  the Act
• potential hindrance section 8(2) of the Bill
• No clear criteria to guide supervisor in
  fulfilling his/her role
• Guard against opaque conditions that may hamper
  growth of co-operative banks

5

• Consequent amendments to the NPS Act
• No reference to primary cooperative banks in the
  Consequent amendments to NPS Act
• Implication primary cooperative banks precluded
  from participating in clearing and settlement
  services?
• Primary cooperative banks to only offer
  transaction services on its own infrastructure?

6

• Limitations on primary cooperative banks
• Lack of clarity on the manner of facilitating
  payment activities of primary cooperative banks
  with reference to Section 14(1)(b) of the Bill
• Offering transaction services only on its own
  infrastructure may
• limit the scope of payment services that primary
  cooperative banks can provide to members
• potentially limit its ability to compete
  effectively

7

• Amalgamation and merger control
• Competition Commission regulates all mergers
  captured under Chapter 3 of the Competition Act
  89 of 1998
• Competition Commission to scrutinize merger
  activities between cooperative banks if captured
  under Chapter 3 of the Competition Act
• Concurrent Jurisdiction Competition Commission
  to liase with Minister of Finance and Supervisor

8

• Conclusion
• Competition Commission supports the
• objectives of the Cooperative Banks Bill
• Establish clear and objective criteria to guide
  Supervisor in considering registration
  applications of cooperative banks
• Clarify rights and obligations of primary
  cooperative banks in respect of clearing and
  settlement services
• Amalgamations need for Competition Commission,
  supervisor and Minister of Finance to liase
  effectively